PeppercomBlog

Plus ca change…

Posted by Matt Purdue, Senior Analyst, Peppercom

The latest Dealogic investment banking league tables are out, and JPMorgan leads the way in year-to-date revenues ($1.19 billion, 7.76 percent market share), just ahead of Goldman Sachs ($1.14B, 7.47). It’s interesting to compare the tables to the credit crisis writedown totals, according to the folks at the Bank Implode-O-Meter.

Obviously, revenues were down across the board. But even the most challenged banks, like Citi, Merrill and UBS, held firm to their places in the top five. One has to wonder what it takes for financiers to lose confidence in a particular i-bank and vote with their feet.

Investment banks ranked by year-to-date revenues

1. JPMorgan Chase: $1.19B in revenue/$9.9B in writedowns
2. Goldman Sachs: $1.14B/$5.4B
3. Citi: $1.06B/$67.1B
4. Merrill Lynch: $981M/$32.2B
5. UBS: $888M/$38B
6. Morgan Stanley: $865M/$16.1B
7. Credit Suisse: $752M/$5.95B
8. Lehman Brothers: $717M/$7.2B
9. Deutsche Bank: $708M/$11.3B
10. Bank of America: $613M/$4.4B
Source: Dealogic

The first thing you know ol' Jed's a millionaire

Posted by Matt Purdue, Senior Analyst, Peppercom.

Timing, as they say, is everything. Today Big Oil executives must be patting themselves on the back for their exquisite timing. Over the weekend their full-page ad ran in the New York Times Magazine, trumpeting the fact that millions of everyday Americans own oil stocks through their managed funds, thus record oil company profits are lifting all boats.

Then this morning news hit that labor strikes in the U.K. and Nigeria could shut down 2.5 percent of the world’s oil production. It could be weeks before oil output returns to normal. Crude should hit $120 per barrel any minute now, and I’m sure we’ll see middle-class Americans running through the streets shouting, “We’re rich!”

Big Oil’s latest rising-tide marketing campaign reeks of disingenuousness. The industry cites research by an economic think tank, Sonecon, showing that the tens of millions of Americans who participate in mutual funds, IRAs and personal retirement accounts indirectly own oil stocks through these accounts. So all this condemnation about their “excess profits,” Big Oil says, is completely misplaced.

Balderdash. First, While many socially responsible funds are not game-breakers, the problem is that most Americans fail to educate themselves about the possibilities of even basic socially responsible investing. Over the long term, some SRI funds fare pretty well. If more Americans were aware of this, Big Oil might not be so high on investor lists.

Second, it doesn’t take a Harvard Fellow to realize that as the price of a gallon of gasoline continues to climb—to a record $3.60 per gallon, 66 cents higher than one year ago—consumer spending power disintegrates. Many of those wonderful middle-class investment gains are getting sucked into gas tanks all over America.

Guys like Exxon/Mobile chieftain Rex Tillerson can have their big raises; he’ll make $21.7 million 2008. We all know that CEOs make nearly 400 times what the average worker earns. This is America; let them make whatever the market will bear. But just please don’t drip light sweet crude on our heads and tell us it’s raining.

Inside the Sausage Factory

Posted by Matt Purdue, Senior Analyst, Peppercom.

Otto Von Bismarck, first chancellor of the German empire, receives credit for this chestnut: Laws are like sausages; it is better not to see them being made. The same could be said for corporate governance, although anyone in financial communications should be fascinated rather than disgusted at the flash news out of Citi’s annual shareholder meeting on April 22, which turned into a modern-day vomitorium.

Unfortunately, I did not attend, but the opinions coming out of the event make it seem like something more fit for the Circus Maximus than a Midtown Manhattan hotel ballroom. Shareholders exploded at the board of directors, and who can blame them? Citi’s stock has lost half its value since their last meeting, and, as Time’s Barbara Kiviat pointed out at the Curious Capitalist, dividends have been chopped by 40%.

Things got so bizarre that at one point a rainforest activist and blogger invited board members to take a flight with her over the Appalachians to see how Citi’s investments in coal mining are allegedly destroying ecosystems there—and Citi chairman Win Bischoff agreed. Then again, Sir Win was probably daydreaming of being anywhere else but in that ballroom.

The press eviscerated Citi’s board members. The Wall Street Journal caught Sir Win rolling his eyes at angry shareholders. The Independent in London quoted a union chief describing Citi as being managed like a “run-down department store.”

Obviously this represents a nightmare for IR and PR professionals. Sometimes all we can do is stand out of the way. Neither Citi’s press page nor investor relations page made mention of the meeting. It’s not like they’d be trumpeting the board’s re-election by a very weak majority. But, in many ways, this is a beautiful thing: it’s capitalism at work. Citi’s board members were justifiably called on the carpet by their superiors: the shareholders. And I would imagine that even Citi’s corp comm staffers--who’ve seen their options plummet--were celebrating just a little bit.

Of Zombies and Schmawsuits

Posted by Matt Purdue, Senior Analyst, Peppercom.

Zombies. It’s one of my favorite words in the English language. Tolkein can have his cellar door. I’ll take zombies every time. The word zombie comes to us from Caribbean French and English Creole via Kimbundu, one of the most popular languages in southwestern African. In Kimbundu, zumbi can be loosely translated as ghost or spirit; and more spirit is what financial communicators need immediately.

Zombie arose last week on the Wall Street Journal’s Deal Journal blog in a piece written by Heidi Moore. Moore was describing the fate of Wachovia in the 23 months since it acquired mortgage lender Golden West. Wachovia CEO Ken Thompson, Moore wrote, called it a “transformative deal.” Tee it up for Moore: “Unfortunately, Golden West did help transform Wachovia—right into one of the mortgage-lending zombies now roaming the financial landscape.”

One day earlier, Moore unearthed another grabber in her piece on the news that a Bain Capital affiliate might be buying some of Deutsche Bank’s debt while Bain and DB are engaged in a legal tussle over the Clear Channel buyout. Her lede: “Lawsuit, schmawsuit.”

Moore’s turns of phrase represent a dying art in financial writing. Clever metaphors and colorful language can draw readers into even the most esoteric topics. That’s a lesson almost completely ignored by public relations professionals. Crafting articles that are not only going to be read but also remembered by audiences increasingly overwhelmed with information requires us all to think very creatively when it comes to writing. Good writing is storytelling, and good stories offer memorable images rather than corporate speak or technical jargon. Good stories are rife with imagery to support the basics of storytelling: suck in the reader, create a conflict and drive the reader toward a resolution. I spent nearly two decades in journalism, and from almost day one I glommed onto the fact that we almost invariably called our pieces “stories.” Now that I’m in PR, I have to stop myself from using that word. We call our writing by various terms: press releases, articles, reports, analyses or the dreaded white paper.

But no matter what we dub them, it’s vital to remember while we write just how reporters think. Reporters are paid to tell great stories, and the closer we can get to delivering content that speaks to them, the more effective we’ll be on behalf of our clients.